But there remains little sense of guilt or shame within the City. Siddarth sums up the general mentality: ‘I think the City is a convenient whipping boy, because everybody loves having a scapegoat,’ he says. ‘Everybody was more than happy to get a zero per cent interest rate on their credit card, everybody’s happy to spend, consume, and spend money that ultimately they don’t have.’ In truth, workers who had been experiencing real-term falls in their living standards long before the crash had been forced to top up their increasingly meagre income with cheap credit.
In the City, you risked ridicule for even mentioning the impact of austerity on people’s lives. ‘If I started talking to people about cuts, I would be a figure of fun,’ says former City trader Darren. ‘If you tried to bring up anything like that to someone, you would be dismissed, shouted down, or ignored.

…

‘But I think now that it’s only purpose is to serve itself.’ Modern capitalism has become completely ‘financialized’, as Professor Costas Lapavitsas puts it. Modern businesses themselves indulge independently in financial speculation with their retained earnings, or the money that is not distributed to shareholders. Households are ever more dependent, too, as the growth of home ownership and the dependence on credit to top up falling living standards lands them in debt. The modern Establishment has been financialized to an unprecedented degree.
Above all, the financial sector is a threat to British democracy. Governments have surrendered their economic powers, whether it be through the abandonment of exchange controls or the promotion of deregulation. Through lobbying, political donations and the concentration of so many former City figures at the heart of power, the financial sector wields formidable clout.

…

We should levy restrictions on foreign ownership of residential property, deflating potentially economically crippling housing bubbles that price Britons out of the market.6
Above all, this would shift economic sovereignty from corporate interests to elected governments, representing a sizeable blow to the Establishment’s position. A democratic revolution would have redistribution of wealth at its very heart. The bank accounts of the wealthy continue to boom, even as the recession causes a fall in living standards. This is not just manifestly unjust; it also represents a huge pile of cash that is not being invested and could be put to productive use. Money is being hoarded when it could be invested and put to social use. And while the poorest 10 per cent pay 43 per cent of their income in taxes, the richest 10 per cent pay just 35 per cent – surely an indefensible state of affairs from any rational perspective.7
More prosperous European countries, such as Denmark, Sweden, Netherlands and Belgium, have significantly higher top rates.

Although the reforms were modest, they were remarkably successful: output grew more rapidly than at any time during the oil boom. But these few percentage points of growth in non-oil output were completely swamped by the fall in the value of oil and the switch from borrowing to repayment, with the consequent contraction in expenditure. The reform-induced growth only helped slightly to offset the misery of falling living standards. That is what happened, but it is not what Nigerians think happened. Unsurprisingly, Nigerians think that the terrible increase in poverty they experienced was caused by the economic reforms that were so loudly trumpeted. Until reform, life was getting better; then along came reform, and poverty soared. Given that belief, Nigerians go on to ask the obvious question: why did we undergo such devastating “reform”?

The government’s own figures in 2010 estimated there were one million more people living in ‘severe poverty’ (defined as earning 40 per cent of the average national wage) than in 1997 (CSJ, 2006). This has risen significantly since the austerity measures started to have an impact on communities after the 2010 General Election. In 2013 the Institute for Fiscal Studies (IFS) published a report revealing that in the first full year of the coalition government, 300,000 more children faced a real fall in living standards that had pushed them into dire levels of poverty (Cribb et al, 2013). The entire increase is from homes where parents are working – there are now 2.4 million children in working households living in severe poverty. And on top of the 300,000 extra young people living below the breadline, half-a-million working-age adults have fallen into the extreme poverty bracket, along with an additional 100,000 pensioners (Cribb et al, 2013).

…

By 2014 – in the aftermath of the weakest economic recovery since the Victorian era – the Conservative-led coalition government was lauding the return of economic growth as vindication of its assault on public spending. But while it certainly was boom time for the rich – the Sunday Times Rich List recorded a doubling of the wealth of the richest 1,000 Britons between 2009 and 2014 – working people suffered the longest fall in living standards in well over a century. Disabled people faced the slashing of benefits, and the indignity and stress of appealing to win back their desperately needed support; workers enduring plummeting pay packets had their in-work benefits cut in real-terms; while no private pensions, no paid leave or no set hours became the reality for workers driven into zero-hour contracts or bogus self-employment.

For all of the progress in sexual equality, the male self-image is still more closely tied to the position of breadwinner. Men are bombarded with macho cultural icons: the athletes, the swaggering Wall Street speculators, and the gunslingers of interactive electronic games. Men have to earn a living, so most will work at whatever they have to, but by and large they will not like it.
The surrounding culture will relentlessly push back the shame and ache of falling living standards back on the individual. The pronouncements from TVs, classrooms, and pulpits will continue to hammer home the message that people are responsible for their own fate. Self-help books, videos, and guest lecturers will promise that you can beat the odds if only you submit to the Seven Principles, the Five Steps, or the Ten Tenets of Success. People will be told that they should smile when what they really want to do is cry or hit someone, or they’ll be advised to ignore the abusive boss and swallow their pride.

The New Economics Foundation found in 2013 that Britain had recently seen the biggest drop in living standards since the Victorian era, most severely affecting public sector workers and women.29 The bald facts of this austerity craze were enough to indicate that something was horribly wrong with modern politics. British prime minister David Cameron felt the need, in 2013, after years of austerity and falling living standards, to teach schoolchildren about the glories of capitalism—which seemed like a defensive impulse. It was vital, he said, to celebrate a culture “that values that typically British, entrepreneurial, buccaneering spirit.”30
Multinational corporations spent the twentieth century gradually reducing their obligations in the various jurisdictions in which they operated. When national and international laws became obsolete or could be circumvented, the relationship between the company, the state, and the public changed irrevocably.

No less an authority than the Wall Street Journal categorically dismissed our
analysis as the nattering of "your dopey aunt."
This chuckling aside, the themes of The Great Reckoning proved less ludicrous
than the guardians of orthodoxy pretended.
• We extended our forecast of the death of the Soviet Union, exploring why Russia and
the other former Soviet republics faced a future of growing civil disorder4
hyperinflation, and falling living standards.
• We explained why the 1 990s would be a decade of downsizing, including for the
first time a worldwide downsizing of governments as well as business entities.
16
•
•
•
•
•
We also forecast that there would be a major redefinition of terms of income
redistribution, with sharp cutbacks in the level of benefits. Hints of fiscal crisis
appeared from Canada to Sweden, and American politicians began to talk of "ending
welfare as we know it."

…

Therefore, eliminating
or sharply reducing the taxes that are negatively compounding against their net worths
may not appear to make them much better off-the price of lower taxation is a diminished
stream of transfer payments. They will lose income because they will no longer be able
to depend upon political compulsion to pick the pockets of persons more productive than
themselves. Those without savings who rely upon government to pay their retirement
benefits and medical care will in all probability suffer a fall in living standards. This loss
of income translates into a depreciation of what financial writer Scott Burns has dubbed
"transcendental" or political capital. 88 This "transcendental" or imaginary capital is
based not upon the economic ownership of assets but upon the de facto claim to the
income stream established by political rules and regulations. For example, the expected
income from government transfer programs could be converted into a bond capitalized at
prevailing interest rates.

It would be simplistic to argue a straightforward cause and effect: that unemployment and poverty had provoked the unrest. After all, the vast majority of people who were out of work or poor did not riot. But there are growing numbers of young people in Britain with no secure future to risk. Youth unemployment is running at over 20 per cent. There is a crisis of affordable housing, the biggest cuts since the 1920s, and falling living standards; university tuition fees have trebled and the Educational Maintenance Allowance for students from poor backgrounds has been scrapped. Many young people have been left with very little to hope for. For the first time since the World War II,the next generation will be worse off than the generation before it. of course, we all have agency: we don't all respond to the same situation in the same way.

Nemeth was under no illusions about the depth of Hungary’s crisis, nor why he had been tapped as prime minister. He was being set up. He was to be the communists’ fall guy, the man whom the people would blame when the economy completely crumbled.
Grosz and other party leaders feared they could not arrest Hungary’s economic slide—30 percent inflation, the highest per capita foreign debt in Europe, falling living standards and wages. Few Hungarian families could make ends meet without working two or even three jobs. Resentment was growing. So that May, at a fractious party conference, they looked around for a potential scapegoat to become prime minister. Nemeth, then head of the party economics department, was their choice. “I was the innocuous compromise candidate,” he would tell me years later, recounting the story of his surprising rise and expected fall—a man who could be counted on to make no waves.

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Grave New World: The End of Globalization, the Return of History
by
Stephen D. King

These were all prominent GDR artists—Biermann had been deported in 1976, while Krug and Mueller-Stahl were allowed to leave the following year.
¹⁰⁴ Cited in Madarász, Conflict, 143.
¹⁰⁵ Jena citizens to Volkskammer, 12 July 1983, exhibit in Museum Haus am Checkpoint Charlie, 2001.
¹⁰⁶ Lehmann to Eichler, 3 Jan. 1975, BAB, DA-5/9013.
212
Behind the Berlin Wall
mould growing on their furniture.¹⁰⁷ Others attacked falling living standards.
In such cases the authorities usually tried to remedy the immediate cause of the aggravation, in the interests of achieving a retraction. Such applications could, it has to be said, range from the sublime to the ridiculous and petitions officers must occasionally have wondered if pranks were being played. One woman’s
reason to leave the country was her inability to get central heating fitted.

In April 1950 the Bureau of the Budget announced: “Foreign economic policies should not be formulated in terms primarily of economic objectives; they must be subordinated to our politico-security objectives and the priorities which the latter involve.”27 Three years later, the National Security Council urged the entry of Japanese goods to the United States to halt “economic deterioration and falling living standards” in Japan that “create fertile ground for communist subversion.”28 The State Department judged that “Japan’s resistance to Soviet-Sino pressures will depend in large measure on whether the free world [is] willing [to] make reasonable place for Japan’s trade.”29
Many believed that American industry was so strong that it would not suffer from unilateral trade measures that drew in imports from Europe and Japan.

The fact that the United States could statistically exit the crisis in the summer of 2009 and that stock markets almost everywhere could recover their losses has had everything to do with the policies of the Federal Reserve. Does this portend a global capitalism managed under the dictatorship of the world’s central bankers whose foremost charge is to protect the power of the banks and the plutocrats? If so, then that seems to offer very little prospect for a solution to current problems of stagnant economies and falling living standards for the mass of the world’s population.
There is also much chatter about the prospects for a technological fix to the current economic malaise. While the bundling of new technologies and organisational forms has always played an important role in facilitating an exit from crises, it has never played a determinate one. The hopeful focus these days is on a ‘knowledge-based’ capitalism (with biomedical and genetic engineering and artificial intelligence at the forefront).

He had finally allowed the imbalance of military power in Europe, which had stood provocatively and overwhelmingly to Soviet advantage since 1945, to be broken unopposed. Behind all this lay a basic truth: Moscow had effectively already given up the ideological struggle. The Russia reborn in 1992 had to confront the unexpected need to substitute at short notice raw patriotism for a long-outmoded belief in a global ideal, all in the face of falling living standards and full consciousness—not least via MTV, now beamed freely into city apartments—of what the West could offer in return for betrayal.
The negative impact on intelligence assets and their recruitment was severe, given how heavily Moscow depended upon human resources once attracted by and tied to the Soviet model. Only with the emergence of their own man, former Lieutenant Colonel Vladimir Putin, as president in 2000 could the “organs” hope to regain lost ground.

In an echo of Ronald Reagan’s war on air traffic controllers in the 1980s, this
was an attempt to dismantle what was left of union power, one which led to sustained
protests across the country.
A similar divide has been emerging in the UK. After falling in every year from
2005-2010, real take-home pay is now predicted to continue to fall for the next year or
two at least. This is the first time since the 1920s there have been six successive years
of falling real living standards, a process that started well before the crash. In both the
US and the UK, the likelihood is that wages will continue to lag productivity postrecovery, living standards will continue to stagnate while the wealth and income gap
will remain at historic highs. Indeed, the new independent economic overseer set up
by the Coalition, the Office for Budget Responsibility, has forecast that the United
Kingdom’s wage share will continue to fall until 2016.416
The risk now is that the fundamental economic factor that has driven rising
instability and created the conditions for the crash—the two-decade long growing
wage-productivity gap in both the UK and the US—is set to continue.

The first category of defaulters consists of those borrowers whose incomes fall, making it impossible for them to make interest payments. The second category consists of those borrowers who had secured their debts against an asset which has fallen in value. In such circumstances, both the borrower and the creditor lose out. The borrower’s wealth is less than it was and so is the creditor’s. They have discovered, like the clients of Bernie Madoff, that part of their wealth was illusory. The result could be a substantial fall in living standards, rather than just sluggish growth.
THE LONG VIEW
As this book has explained, the world has seen cycle after cycle in which money and debts have expanded. These cycles are initially self-reinforcing as the extra money begets confidence, as in John Law’s experiment in the early eighteenth century. That is because one of Law’s insights was correct. Money is a medium of exchange as well as a store of value.

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The Great Reset: How the Post-Crash Economy Will Change the Way We Live and Work
by
Richard Florida

Workers always produce more than they can consume, more even than society as a whole can consume. Or, as the blogger Yves Smith at Naked Capitalism put it, “The US needs to wean itself of unsustainable overconsumption, and since consumption has come to depend on growth in indebtedness, a reversal, however painful, is necessary. Our excesses have been so great that there is no way out of this that does not lead to a general fall in living standards.”9
At a deeper level, the financial meltdown also signaled the rise of a new economic system broadly. The Long Depression was the crisis of the First Industrial Revolution. The massive growth and productivity of the textile, steel, and railroad industries could not be contained by the larger, mainly rural society of the period. The United States’ spatial fix transformed it from a largely rural country dotted with trading centers and mill towns to a country of giant industrial cities that concentrated production, generated a great wave of innovation, and created a new way of life and a landscape of economic growth.

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The End of Alchemy: Money, Banking and the Future of the Global Economy
by
Mervyn King

One day German voters may rebel against the losses imposed on them by the need to support their weaker brethren, and undoubtedly the easiest way to divide the euro area would be for Germany itself to exit. But the more likely cause of a break-up of the euro area is that voters in the south will tire of the grinding and relentless burden of mass unemployment and the emigration of talented young people. The counter-argument – that exit from the euro area would lead to chaos, falls in living standards and continuing uncertainty about the survival of the currency union – has real weight. But if the alternative is crushing austerity, continuing mass unemployment, and no end in sight to the burden of debt, then leaving the euro area may be the only way to plot a route back to economic growth and full employment. The long-term benefits outweigh the short-term costs. Outsiders cannot make that choice, but they can encourage Germany, and the rest of the euro area, to face up to it.

Initial discussion topics included the peasants’ revolt of 1514 (a pretext for a debate on agricultural policy) and an analysis of Hungarian historiography (a pretext for a debate about the falsification of history in communist textbooks).55 The choice of name quickly proved “double-edged,” as one Hungarian writer put it: Petőfi had been a revolutionary fighting for Hungarian independence and the group bearing his name soon felt empowered to become revolutionary too.56
Changes had been taking place in other regime institutions at the same time. At Szabad Nép, the communist party’s hitherto reliable newspaper, reporters had become restless. In October 1954, a group of them, sent to cover life in the country’s factories, returned wanting to write about faked production statistics, falling living standards, and workers who had been blackmailed into buying “peace bonds.” In a published article, they declared that “though the life of the workers has changed and improved a great deal in the last ten years, many of them still have serious problems. Many are still living in overcrowded and shabby apartments. Many have to think twice about buying their children a new pair of shoes or going to an occasional movie!”

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The Rent Is Too Damn High: What to Do About It, and Why It Matters More Than You Think
by
Matthew Yglesias

Even if we discount the 1980s as a decade of adjustment and take it out of the equation, per capita income in the region during the 1990s grew at basically half the rate of the ‘bad old days’ (3.1% vs 1.7%). Between 2000 and 2005, the region has done even worse; it virtually stood still, with per capita income growing at only 0.6% per year.21 As for Africa, its per capita income grew relatively slowly even in the 1960s and the 1970s (1–2% a year). But since the 1980s, the region has seen a fall in living standards. This record is a damning indictment of the neo-liberal orthodoxy, because most of the African economies have been practically run by the IMF and the World Bank over the past quarter of a century.
The poor growth record of neo-liberal globalization since the 1980s is particularly embarrassing. Accelerating growth – if necessary at the cost of increasing inequality and possibly some increase in poverty – was the proclaimed goal of neo-liberal reform.

The growth acceleration was so dramatic that the half-century following 1820 is typically referred to as the Industrial Revolution.6
In those fifty years, per capita income in Western Europe grew at 1 per cent, a poor growth rate these days (Japan grew at that rate during the so-called ‘lost decade’ of the 1990s), but compared to the 0.14 per cent growth rate between 1500 and 1820, it was a turbo-charged drive.
Expect to live for seventeen years and work eighty hours a week: misery increases for some
This acceleration of growth in per capita income, however, was initially accompanied by a fall in living standards for many. Some with old skills – such as textile artisans – lost their jobs, having been replaced by machines operated by cheaper, unskilled workers, including many children. Some machines were even designed with the small sizes of children in mind. Those who were hired to work in factories, or in the small workshops that supplied inputs for them, worked long hours – seventy to eighty hours per week was the norm, and some worked more than 100 hours a week with usually only half of Sunday free.

Even if we discount the 1980s as a decade of adjustment and take it out of the equation, per capita income in the region during the 1990s grew at basically half the rate of the ‘bad old days’ (3.1% vs 1.7%). Between 2000 and 2005, the region has done even worse; it virtually stood still, with per capita income growing at only 0.6% per year.21 As for Africa, its per capita income grew relatively slowly even in the 1960s and the 1970s (1–2% a year). But since the 1980s, the region has seen a fall in living standards. This record is a damning indictment of the neo-liberal orthodoxy, because most of the African economies have been practically run by the IMF and the World Bank over the past quarter of a century.
The poor growth record of neo-liberal globalization since the 1980s is particularly embarrassing. Accelerating growth – if necessary at the cost of increasing inequality and possibly some increase in poverty – was the proclaimed goal of neo-liberal reform.

In fact, one study found that 70 per cent of people aged 70 or under felt there was a minimal chance of selling their house to pay for retirement.7 Another study found that when people retire they are equally as likely to move into a larger house as a smaller one.8 It is generally only traumatic events, such as death of a partner or illness, that tends to trigger house sales as people age.
Given that owning a house provides imputed rent, and selling a house involves a fall in living standards, it is no surprise that equity release schemes have been growing in popularity with older home owners. Equity release helps provide financing without the loss of imputed rent. This clearly has a role to play in providing financing for old age, but while these schemes make a contribution, they cannot be relied upon to solve the problem. To use equity release, a person needs to have equity in their home.

By 1974 just 7 per cent of eligible houses had changed hands, and the next government immediately changed course.20
There were two obvious problems with Heath’s ‘quiet revolution’. The first was that it was not terribly popular. Although most people had read in their newspapers about Britain’s competitive decline, and were certainly aware that the country had lost power and prestige since the Second World War, their own lives, by and large, had been marked by greater affluence and opportunity. They had not yet realized the penalties – in higher prices, falling living standards, pay freezes and strikes – they would have to pay for Britain’s economic problems, and there was little sense that they wanted radical change. What was more, Heath’s bloodless brand of time-and-motion modernization was not always very attractive, a classic example being Walker’s reform of local government. The historian John Campbell argues that since the existing system was such a messy, disorganized patchwork of counties, county boroughs, non-county boroughs, district councils and parish councils, ‘reform was long overdue’.

Grant imposed legal tender laws on Americans via the subversion of the Supreme Court set a pattern of duplicity by the Executive Branch that remains strongly embedded in American jurisprudence today.
By giving the federal government control over the issuance of “money,” which was now defined as a piece of paper, an expedient war leader doomed future generations of Americans to live with inflation and falling real living standards, the bitter legacy of all legal tender laws going back centuries before the founding of the United States. When émigrés from Europe came to the United States seeking freedom, it was not just religious liberty or freedom from physical bondage, but also freedom from the tendency of monarchs to compel their subjects to use the king’s money, which was frequently light in terms of metal content.

‘Benefit fraud could lead to 10-year jail terms, says DPP’, BBC News, 16 September 2013, at: www.bbc.co.uk/news/uk–24104743 By way of comparison, the official figures for average punishments for some other crimes are reported on by Alan Travis, ‘Rape sentences now average eight years, Ministry of Justice figures show’, Guardian, 27 May 2011, at: www.theguardian.com/society/2011/may/26/rape-sentence-average-eight-years-justice-figures
22. Curtice, ‘Thermostat or weather vane?’.
23. British polling by YouGov from spring 2013 suggests that a majority (52%) of poorer families (gross income below £20,000) anticipate a continuing fall in living standards, compared to less than one-third (31%) of households where income exceeds £70,000. Details reported in: Resolution Foundation, 2015: The living standards election, 2013, at: www.resolutionfoundation.org/media/media/downloads/2015_-_The_living_standards_election.pdf
24. Tom Clark, ‘Britons favour state responsibilities over individualism, finds survey’, Guardian, 15 April 2013, at: www.theguardian.com/society/2013/apr/14/britons-sympathetic-unemployed-france-germany
25.

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The Corruption of Capitalism: Why Rentiers Thrive and Work Does Not Pay
by
Guy Standing

When someone ‘shares’ a car, apartment or utensils for money, they convert zones of privacy and use value into alienated commodities with exchange value. It is an instance of the Lauderdale Paradox, in which commodification is an act of privatisation that contrives scarcity of space or time.
These forms of labour intensify the pressure to commodify all aspects of life. Intensifying self-exploitation is a sad way for the precariat to respond to adversity. It is how those experiencing falling wages and living standards cover up the decline, for a while.
In addition, governments will have fiscal problems due to the changing character of labour and work. The shift to taskers will reduce tax revenue through lower employee and employer contributions and will push more people below tax thresholds, for example by expanding part-time labour. In many countries, payroll and income taxes are lower for those classified as independent contractors.

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Rethinking the Economics of Land and Housing
by
Josh Ryan-Collins,
Toby Lloyd,
Laurie Macfarlane,
John Muellbauer

As shown in Figure 5.2, mortgage debt outstanding has increased from around 30% of real disposable income in 1987 to almost 100%, helping to drive up average house prices from four times disposable income per household to ten times. This of course disguises large regional variations – in more desirable areas such as London and the South East the ratio is up to twenty times (ONS, 2015c). Recent research shows that when housing costs (including mortgage debt and rents) are included in an assessment of changing living standards since 2002, over half of UK households across the working age population have seen falling or flat living standards (Clarke et al., 2016).
Figure 5.2 House prices and mortgage debt compared to income in the UK (source: ONS, Nationwide and Bank of England; data de‹ated using 2010 prices)
The impact of rising housing costs is not distributed equally across populations of course. In 2013, 1.17 million households had mortgage debts amounting to more than 4.5 times their disposable income – representing nearly one in seven (13.2%) households with mortgages (ONS, 2015a, p. 1).

Equally important to his image as a Thatcherite, however, was a simple cultural perception of his humble origins. His father was a trapeze artist in the music halls, who had moved with some success into the garden ornaments business, before the bottom dropped out of the gnome market on the outbreak of the Second World War. By the time John Major was born in 1943, the family had suffered a severe fall in living standards, and he grew up in straitened circumstances in South London, leaving school with just three O-levels. The fact that he subsequently rose so high was entirely due to his involvement in the Conservative Party, and was seen as a fine illustration of a new meritocracy. ‘What does the Conservative Party offer a working class kid from Brixton?’ asked a Tory election poster in 1992. ‘They made him prime minister.’

In Latin America, the bad times are pushing countries to the right. Spiraling prices for staple foods and collapsing growth conspired to unseat the left-wing government in Argentina and the left-wing legislature in Venezuela. As the price of onions rule warns, rapidly rising prices for basics like onions doom economic prospects and often unseat leaders, particularly when high inflation is accompanied by falling growth and dwindling living standards. One simple rule of thumb is to watch out for countries where inflation is well above the emerging-world average, which has fallen recently to around 4 percent. In Argentina the combination of 25 percent inflation and zero growth toppled President Cristina Fernández de Kirchner and her populist party, which had been in power for twelve years. Meanwhile, to the north in Venezuela, the pain of 100 percent inflation and negative 10 percent GDP growth ended its socialist party’s hold on the national assembly after seventeen years.